Coal Investors

Indonesian coal industry is quite huge. There are tons of buyers from everywhere, China, India, Korea, Japan, Singapore, Malaysia, and other countries. Investors approaches Coal Cash Funder Services to invest in coal trading business, coal mine or coal infrastructures.

The Demand

Coal Exports

In April 2011, Coal Age reported that Indonesian coal miners expect to dig up 340 million metric tonnes (MT) of coal in 2011, an increase of 23% from 275 million MT in 2010. Of the planned 340 million MT of coal produced in 2011, the association estimates 20% of it—around 70 million MT —will be allocated to domestic market demand, while the remaining 80% will be exported, primarily to Japan, China, India and South Korea, which are estimated to remain the largest importers of Indonesia’s coal.

ABARE, an Australian government economic modeling and statistics agency, stated that in 2009, Indonesia exported approximately 200 million tonnes of thermal coal with the recovery in Asian economies likely to "support an increase in exports to around 210 million tonnes". ABARE estimates that in the period to 2015, Indonesia thermal coal exports could increase to approximately 250 million tonnes.

In a 2005 presentation, Rubianto Indrayuda from the Ministry of Energy and Mineral Resources estimated that Indonesian coal exports would be approximately 124 million tonnes in 2010 and peak at 128 million tonnes in 2015. That exports were far far higher within a few years. ABARE stated that "key expansion projects supporting increased exports include Bumi Resources’ plan to expand its KPC and Arutmin mines from 53 million tonnes in 2009 to 111 million tonnes by 2013 and PT Adaro Energy’s plan to increase its mine capacity to 80 million tonnes by 2014."

In an earlier review on the global coal trade, ABARE analyst Alan Copeland noted that thermal coal exports from Indonesia were estimated to have grown by approximately 33% in 2004, 2005 and 2006: "The growth in Indonesia’s exports reflects the ability of its coal industry to respond to the rapid growth in Asian demand for thermal coal, supported by unconstrained transport and port capacity. A significant proportion of coal transport in Indonesia is water based, which allows for coal to be transported along rivers via barges to the open sea for loading on to larger vessels."

There has also been a rise in illegal mining. In September 2005, the Washington Post reported on coal-laden trucks -- which are notionally banned from public roads -- going all-night from "from scores of often-illegal mines" on their way to a local port.

In June 2006 ABARE listed the main destinations for Indonesian thermal coal as being:

    * Japan (approximately 25%);

    * China (17%)

    * India (15%); and

    * the Republic of Korea (13%).

Copeland notes that India imports Indonesian low-ash coal for blending with its higher-ash content domestic coals.

Exports to China

Between 2000 and 2007, Indonesian coal deliveries to China increased by 157%. In August 2010, China's sovereign wealth fund, China Investment Corporation (CIC) announced that, in order to "secure more resources in Southeast Asia and benefit from increasing trade in the region" it would "plough" US$2 billion into coal, electricity and port projects in Indonesia. No time limit was given for fulfilling these objectives, but CIC said it was interested specifically in three Indonesian state firms: the coal mine company PT Tambang Batubara Bukit Asam; the state electricity company, PLN; and port operator, Pelindo.

Indonesia Domestic Coal Consumption

The Indonesian government sees its role as encouraging and providing for a rapid expansion in the domestic consumption of coal. In a 2005 presentation, a government official projected that total domestic coal consumption would grow from 30.6 million tonnes in 2003 to 95.6 million tonnes in 2020. The largest component of the rapid projected growth was in coal-fired power generation with consumption projected to grow from 22.9 million tonnes in 2003 to 72 million tonnes in 2020.

However, while the government was keen to promote the exploitation of the country's coal resources, there were substantial challenges. Some of these, Rubianto Indrayuda stated, were that most of the coal is "classified as low rank coal which requires specific treatments for its utilization" and that most of the coal deposits were in areas remote from existing infrastructure. He also flagged that there were other problems too such as "weak" law enforcement resulting in illegal coal mining, conflicting roles between national and regional governments. He also stated that the "regulation classifying mining waste as hazardous material" was a major problem."

National Coal Policy

Sixty percent of Indonesia's total electricity demand is met by burning coal. Since 2000 the Indonesian government, faced with at least a short to medium-term decline in domestic oil and gas production, has adopted a policy of attempting to diversify its domestic energy sources. In January 2004 the Indonesian government announced its National Coal Policy which aims to boost the development of coal-fired power stations and dramatically increase coal exports. This policy co-incided with Indonesia becoming a net oil importer.

While approximately 8% of Indonesia's electricity is generated from hydropower, further developments are likely to be limited due to the high capital costs, limited infrastructure and environmental and social concerns. While the country currently has no operating nuclear power stations, in March 2008 the State Minister for Research and Technology, Kusmayanto Kadiman, optimistically proclaimed that the government would build four 1,2000 megawatt nuclear power stations in the next 17 years. It is proposed that the first of the plants would be operational by 2016/2017.However, with strong local opposition to nuclear power, it is uncertain how far the proposals will progress.

Domestic Coal-Fired Power Stations

Between 1993 and 2003 there has been a 78% growth in domestic power generation capacity. (See Indonesia and coal/Installed electrical generating capacity). According to the WCI just over 48% of the capacity is from coal-fired power stations. In 2004 31 million tonnes of coal was used in power generation with a further 10 million tonnes for direct use by industry.

The rapid increase in coal-fired generating capacity is set to continue. The Indonesian Government has stated its intention to extend access to electricity from approximately 65% (2006 figures) to 93 per cent by 2025. ABARE noted in early 2010 that "meet this target, 57 gigawatts of electricity generating capacity is planned to be built over this period."

PT Perusahaan Listrik Negara (PLN), the state-owned electricity utility, has proposed plans to add an additional 10,000 megawatts of coal-fired capacity by 2011 as phase one of reaching the government's target. It also plans a further 10,000 megawatts, beginning in 2011, as phase two of the electrification project.

However, the U.S. government's Energy Information Administration is skeptical that the proposals, which seek private sector involvement, will come to much. "However," the EIA wrote in a review of Indonesia's energy generation sector, "foreign investors have largely avoided the Indonesian power sector in recent years due to the poor financial condition of PT PLN and the uncertain regulatory climate in the electricity sector."However, one driver of increased domestic coal consumption will be plans by PLN to convert a number of oil-fired power stations to coal-fired.

Indonesia Coal Supply

Coal Reserves

According to the 2010 BP Statistical Energy Survey, Indonesia had 2009 coal reserves of 4328 million tons, or 0.52% of the world total. In January 2005 Rubianto Indrayuda, the Deputy Director on Coal Mining Services at the Indonesian Ministry of Energy and Mineral Resources stated in a presentation to a APEC Clean Fossil Energy Technical and Policy Seminar that 49% of the country's coal resources were classified as being low quality (<5100 cal/gram), 26% as being of medium quality (5100-6100 cal/gr) and 24% as high quality (6100-7100 cal/gr). He stated that there were 12,466 million tonnes of measured reserves, 20,533 million of indicated reserves and 24,314 million tonnes of inferred reserves.

Indonesia Coal Mining Permits (KP)

The Indonesia coal industry is widely divided among actual coal miner, coal investor and permit (IUP) KP owners, each having their own expectation.

There are “A LOT OF SUPPLY” but “NOT A LOT OF RIGHT MIX” in the Indonesia coal industry. Finding the right partner and right mine left a lot to be desired, mostly disappointing if not dealing with the permit owners, deal makers, worst of all, local authorities, people issues and unwritten rules and norms along the eco-system.

The Investment Opportunity

Indonesia Coal Cash Funder Services

Coal Cash Funder Services team has extensive experience in Indonesia Kalimantan coal mines. Our strong team consist of private equity investors, corporate finance experts, financial advisors, investment bankers, geologists, site engineer & mine planner, and lobbyist which ensure investors and mine owners get access to feasible mines and right investments.

Coal Mine Owners (KP owners)

Coal Cash Indonesia associate has high interest in Indonesia coal (batubara) mine joint venture, acquisition or project investment, especially thermal coal or coking coal in Kalimantan, Sumatra, or Sulawesi. If you are the actual coal mine owner, contact us for more information.

Indonesia Coal Supplier

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COAL FUNDERS

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